What you need to know
Building Indemnity Insurance, also known as Builders Warranty Insurance or Home Warranty Insurance, is a statutory insurance product required for certain domestic building work in South Australia. This insurance provides protection for the current homeowner and future owners against financial loss.
In South Australia, Building Indemnity Insurance is mandatory for any domestic building work that must be approved by council and costs $20,000 or more. The insurance protects homeowners if a builder cannot complete works or rectify faulty works due to the builder’s death, disappearance, or insolvency. The cover is provided for up to 5 years after completion of the build, and for policies issued on or after July 1, 2017, the cover limit for the homeowner and subsequent homeowners is up to $150,000 or $250,000 for new policies issued from 1st October 2025.
The builder is responsible for arranging and paying for the Building Indemnity policy. A certificate of insurance must be taken out and paid by the builder before building works start, and a copy must be provided to both the homeowner and the council. Although the builder pays and organises the policy, the insurance is issued in the name of the homeowner, not the builder. Guardian Insurance Brokers have a specialised team that can assist builders in arranging this insurance.
Here are some commonly asked questions about Building Indemnity Insurance in South Australia:
What is Building Indemnity Insurance?
Building Indemnity Insurance, also referred to as Builders Warranty Insurance or Home Warranty Insurance, is a statutory insurance product that protects homeowners against financial loss if their builder is unable to complete work or rectify defects due to death, disappearance, or insolvency.
Is Building Indemnity Insurance mandatory in South Australia?
Yes, Building Indemnity Insurance is mandatory in South Australia for domestic building work valued at $20,000 or more that requires council approval. Builders must obtain this insurance before commencing work.
What specific domestic building work in South Australia requires Building Indemnity Insurance?
In South Australia, any residential works costing $20,000 or more that require council approval must have Building Indemnity Insurance. This includes constructing, altering, repairing, improving, adding to, or demolishing a house, as well as site excavation/filling, and the construction/alteration/repair/improvement of swimming pools or spas within or near a house. Non-structural work such as cabinet making or tiling, not requiring council approval, does not need Building Indemnity Insurance.
Who does Building Indemnity Insurance protect?
Building Indemnity Insurance protects the current homeowner and subsequent homeowners (successors in title) of the property. The builder is specifically not covered by this policy.
What financial losses does Building Indemnity Insurance cover for homeowners?
This insurance protects homeowners against financial loss from non-completion of the building contract (including loss of deposit) or incomplete/defective work if the builder dies, disappears, or becomes insolvent. It also covers failure of the builder to correct faults if compensation cannot be recovered from the builder due to their insolvency, death, or disappearance.
How long does Building Indemnity Insurance coverage last in South Australia?
In South Australia, Building Indemnity insurance covers claims for a period of five years from the date of practical completion of the building works. Practical completion is defined as when the building, extensions, or renovations are completed and ready for occupation.
What is the maximum amount covered by a Building Indemnity Insurance policy in South Australia?
For policies issued on or after July 1, 2017, the cover for the homeowner and subsequent homeowners is provided up to $150,000 or $250,000 for new policies issued from 1 October 2025. An excess of $400 for each claim may apply.
Who is responsible for paying for and arranging Building Indemnity Insurance?
The builder is responsible for arranging and paying for the policy. Typically, the builder budgets for this amount in their pricing to the client.
When must Building Indemnity Insurance be taken out?
Building Indemnity insurance is required to be taken out and paid by the builder before building works start. Work cannot commence until the insurance has been arranged, and the certificate of insurance has been provided to the homeowner and the council.
Do owner-builders need Building Indemnity Insurance in South Australia?
No. In South Australia, owner-builders generally do not require Building Indemnity Insurance if they intend to live in the home for at least five years after completion; local councils can usually provide a waiver in this case. However, if an owner-builder without their own building license signs contracts with licensed contractors for works over $20,000, it’s the contractor’s responsibility to secure Building Indemnity Insurance coverage for their work. If an owner-builder holds a building license and builds on land owned in the same entity as their license, they may be eligible to obtain Building Indemnity Insurance directly through the full eligibility application process.
What happens if a builder fails to obtain required Building Indemnity Insurance?
Builders who fail to obtain the required Building Indemnity Insurance before commencing work or accepting payment can face prosecution, fines, and risk losing their builder’s licence.
If you would like to know more about Building Indemnity Insurance policies and, or any of our other Construction products, please call Adam Luppino or Tara Xanthopoulos on (08) 8238 0100 or email them builderswarranty@guardian.com.au